Economy and Our Future: WHAT EUROPEAN UNION MEANS TO THE PEOPLE OF EUROPE ...

Economy and Our Future: WHAT EUROPEAN UNION MEANS TO THE PEOPLE OF EUROPE ...: The mainstream media is currently focusing on the issues like Arab Spring, Iran, EU debt crisis, US economy and Terrori...

WHAT EUROPEAN UNION MEANS TO THE PEOPLE OF EUROPE AND THE WORLD?

The mainstream media is currently focusing on the issues like Arab Spring, Iran, EU debt crisis, US economy and Terrorism. As the title of article suggests, I will explain my views on the current situation and where this crisis is going to lead the world. I deliberately separated EU debt crisis and US economy as two different issues because of the political ambitions and their implication. EU was formed with a basic aim of economic cooperation between the founding states. This cooperation currently has 27 sovereign countries as its members though some of members don’t share the common currency and common visa policy.

Current Situation:

In the later mid-2000s, world started to hear the feeble screams of the economic crisis from some EU member states. When the US officially entered into recession in 2008 these feeble screams became news. The initial European victims were Greece, Ireland and Portugal, and required billions of dollars of bailout. Spanish and Italian economies are also in serious trouble and may soon ask for assistance from ECB or IMF. There are concerns that this crisis will spread to Belgium, France and United Kingdom. This crisis has a direct relation with the current tax hikes, carbon tax, increase in retirement age, high unemployment, inflation in food and utility prices and cuts in social benefits and funding like unemployment, child care, pension, school, library, university, health care and other similar social services.

Let’s put aside the blame of who created this mess. The big question is what will be the economic and political consequences of this crisis and who will be at the short end of the stick. The later question has a simple answer, the people of EU will suffer gravely and the degree of suffering greatly depends on how much is their country’s influence on politics in Brussels.  The answer of the first question is scary and it is connected to almost all the events going on around the world and it is better to discuss them separately.

Economic consequences:

As always the politicians have taken over the debts of private bank and financial institutions and have enslaved the people of Europe specially the troubled economies. The correction measure imposed by ECB for the weak economies were focused only on more debt, restructuring and imposition of austerity measures on already burdened tax payers.

The question is how long will ECB and IMF finance these bailout packages, the answer is till they feel that the debt poison has completely paralyzed the country and the people are so dependent on government that they will not resist the overtake of their state/public assets and their sovereignty. At that point all the countries will default to their debts and Brussels will set terms of default. These terms will mainly be focused on strengthening the political arms of Brussels.

The default will result in a huge portion of debt been written off and rest will be paid with extremely high interest. Since ECB and IMF have used the cash pool of European and Foreign Banks, the bad debt will force some banks to collapse or merge with others to survive. Eventually the people of strong economies will face the consequences of giving their tax money without any accountability.

Keep in mind the aim is to let the weak economies default but they still are a part of euro. As we have seen that former Greek Prime Minister George Papandreou left the office days after announcing referendum about Greece shunning euro and possibly leaving EU. Almost all the EU leaders condemned this announcement and he backtracked his statement. The person who replaced him has served as ECB Vice President for 8 years.

The solution for the weak European economies is to leave euro and adopt their own currency, which they can devalue according to their needs. They must hold accountable banks, financial institutions and politicians who created this mess. Introduce tax reforms to narrow the wealth gap and most importantly allocate funds for social and public programs.

Political Consequences:

This economic crisis is designed to align the political and social system of the whole EU; its member states will surrender their foreign policy and will ratify a new treaty to replace Lisbon treaty. Under the new treaty, EU will have a single Foreign and Economic policy. A member state cannot ink a deal with a non-EU state without the approval of Brussels even though the deal has economic or social benefits to that EU state. We have seen that the Iran oil embargo has affected already crisis-ridden Italy, Spain and Greece, any further push from EU to reduce dependency on Iranian Oil will make this crisis worse. With a single foreign policy Brussels can push unwilling member states to choose sides incase of conflict rather than being impartial. 

Lets think of a moment what will happen if EU goes into a depression. Imagine the number of unemployed people, flight of capital, labor exploitation, brain drain, crime rate, social disintegration and possibly a civil war between EU states over resources.

Non-elected technocrats working for Brussels are now heading two crisis-ridden countries and Brussels is trying to promote a selected democracy in partnership with US in Africa and Middle East, while rejecting far more democratically elected governments all over the world. People in Europe demand a referendum on single currency, foreign policy and illegal bailouts but this demand is constantly been ignored because they know people will vote against Brussels.